CHRISTOPHER FIRTH

COULD YOU TELL US ABOUT YOUR BACKGROUND?

I am from the United Kingdom and I got my first degree at Leeds in operations research, which I now regard as an ancestor of financial engineering (indeed 2012 marked the sixtieth anniversary of Modern Portfolio Theory and the contribution of Harry Markowitz to operations research was celebrated). Applications of both fields address quantitative problems and make a heavy use of computers, although the types of problems I tackled in school had more to do with weaponry and logistics than finance (but then again derivatives are weapons of mass destruction if Warren Buffett is to be believed).

After graduating, I fairly soon did a masters by research on human-computer interaction at the University of Leeds; it taught me how to write research at the master’s level and I ended up publishing a paper co-authored with my supervisor. As part of the first degree, I spent a year in Canada working with Telesat, a satellite operator. This gave me a taste of going overseas and of working in a young, modern country – I was from a small, sleepy town in the UK, so living in Ottawa was like jumping twenty years into the future.

I subsequently worked in the United Kingdom for a few years, then was hired by Digital Equipment Company (DEC) to work as a software engineer in France and support a unit doing research without very obvious business relevance. After three years there I transferred with DEC to Hong Kong to create solutions for banks; that is when I got into finance. The founder of DEC was educated at MIT and MIT was a source of inspiration for many in the company, so when I decided to do an MBA, I turned to MIT Sloan School of Management. During the MBA I managed to work briefly as a paid Research Assistant and eventually had a paper published too. After that, since I had just got married to a Singaporean, I decided to join Citi in Singapore and was integrated into their management programme. Rotating various functions in retail banking was a great learning experience, which in retrospect equipped me for what came next: new venture creation.

The dotcom era was burgeoning when, with two other MIT graduates, we had an idea of an online financial supermarket. We were quite unlike the average dotcom entrepreneurs of the time: we were all in our late thirties and had experience running budgets. So we spent the firm’s money in a very boring way, even returning excess funds to investors. Trying to sell everything a traditional financial intermediary sells on the Internet was a new idea back then and full of trial and error – we sold a variety of financial products. For example, we got banks to bid in reverse auctions to get the best terms for our home loan clients.

We also discovered that not everything could be sold online – for example, people need to be persuaded into buying life insurance. Mutual funds on the other hand were the perfect product for online distribution: they were easy to sell and offline distributors were asking a massive 5% in front-end commissions. We were among the first to offer mutual funds online and the traditional banks were slow to react, allowing us to enjoy a few years of fast growth. As part of the increased focus on investments we became a licensed financial adviser, regulated by the Monetary Authority of Singapore.

Also, for marketing purposes, I wrote a book published by Pearson on investing for retail investors. The book was well reviewed in the local newspapers and a good credibility builder among our clients. By 2006 we had several thousand retail investors, hundreds of millions of dollars of assets under management (AUM) and we seemingly had exponential growth. In July 2007, the company was acquired by Aviva and I stayed on as Chief Executive. In hindsight, this was rather good timing from my point of view. Despite the ensuing financial crisis the firm today is roughly three times the size by AUM that it was in 2006. However, the expectations of exponential growth have gone!

Prior to embarking upon the PhD in Finance at EDHEC-Risk Institute, I completed a Master’s in Financial Engineering at the National University of Singapore.

WHY A PHD, WHY NOW?

I have always had a keen interest in studying along with doing business; each decade since I left school, I completed a degree-level course. Having extracted what I could from master level education and acquired a strong taste for research from my academic and industry experiences, the next step had to be a PhD. I had been looking for a suitable programme for a while, but until I came across the EDHEC-Risk Institute programme, the only quality options were full-time programmes and I did not want to leave the company. What I wanted was an intellectually challenging environment and the opportunity to do academic research on something I had first-hand business knowledge of and which sits at the core of the company’s proposition (i.e. retail investment). Doing a Master’s in Financial Engineering was kind of a fall-back in the absence of a suitable doctoral programme, but it turned out to be good preparation for the PhD.

Observing the global financial crisis unfold also brought a lot of interesting questions on how investors and advisors choose products and how they change their criteria when things go wrong – a lot of it is behavioural. This provided motivation for my research topics, which revolve around better understanding of investors’ decision processes and improving retail investment through new product and advice solutions. Mature students’ advantage is to have seen things at the sharp end and, often, to have unique datasets.

WHY THE EDHEC-RISK INSTITUTE PHD IN FINANCE?

It is almost a perfect fit for me. To start with, there are not that many PhDs that look exclusively at finance, especially in the region – the programme’s rigorous and focused curriculum was an attraction. Then, the programme’s faculty is superb in both depth and width, giving participants opportunities to interact with the leaders in a variety of fields. Last but not least, there is the reputation of EDHEC-Risk Institute as a research institution that delivers work that is relevant to industry and actively engages investment managers and investors. This aligns extremely well with my penchant for practice oriented research.

DOES THE PROGRAMME LIVE UP TO YOUR EXPECTATIONS?

I was told this was going to be intensive and I was not deceived – doing the programme while keeping a full-time career is very demanding. While the Master’s in Financial Engineering laid the groundwork in terms of quantitative techniques, it was narrowly focused on derivatives and was not designed to impart research skills. While the first year of the PhD is exacting, core courses allow me to fill my knowledge gaps and raise my research standards.

I also find that there is a lot of informal learning going on, during workshops for instance, or when professors deviate from the slides in class to discuss how a result was established after trials and errors, or how avenues were explored that turned out to be dead-ends. Through such interactions, I have come to understand research as a process rather than a finished product. It is also interesting to see what models academics use in their “research toolkit”. It appears different from what industry practitioners use or are familiar with. That is also true of data and approaches. For example, Professor López de Silanes impressed by his research. He had approached long-standing conventional wisdom with an open-mind, and had used simple, clever ways to address and sometimes debunk the status quo. For me, this was an illuminating experience.

Even after one year I have gained a lot from the programme. However, I am still building my research capabilities and it is likely that there are insights on my chosen topic that I will not recognise until I am further into the PhD. My expectations have been met so far and with respect to faculty, I must say we are quite spoiled in terms of superstar professors. The biggest challenge for working students is to absorb many new concepts and techniques in a very short time. Most students will have gaps in their knowledge and must not be too reticent with the star professors. I am guilty of asking several stupid questions!

WHO DO YOU THINK THIS PROGRAMME IS FOR?

I would say this is for those who are curious, enjoy being challenged intellectually, love doing new things and have a true commitment to learning and self-development. The programme requires a very significant time commitment and if you are only motivated by a career advancement point of view, this may be insufficient to sustain you through till the end of it.